Given the country’s heavy exposure to turmoil in the Middle East, the Marcos administration’s response to the crisis has so far been measured. Yet the situation is shifting quickly, posing real risks for oil-import-dependent economies like the Philippines.
Time is short. Supply disruptions passing through the Strait of Hormuz have already triggered sharp swings in global oil prices, while policy think tanks warn that Asia could face mounting economic pressure if the conflict drags on.
The Philippines imports up to 95 percent of its crude from the Middle East, with limited alternative routes or buffers, making it one of the most exposed in Asia alongside Thailand and Korea.
A full energy shortage scenario looms if Hormuz stays closed, hitting transport, power, and food costs hard.
End-of-March risks are real, transport groups are eyeing nationwide strikes while businesses are prepping diesel backups, and analysts note the window for naval escorts or resolution is tightening.
International Energy Agency member countries agreed on Wednesday to release 400 million barrels of oil from their reserves, the largest ever, to soothe market jitters rather than respond to the supply situation.
The reserves released are estimated to cover 20 days of supply that was disrupted by the Iranian blockade of the Strait of Hormuz. More than 20 days of war will mean the reserves will be spent, and prices will go up again.
The backlash from a long conflict will be felt most in Asia, which remains highly dependent on fossil fuels. Most of the tankers stranded in the Strait of Hormuz were destined for the Asian market.
The actions by the Marcos administration thus far remain overwhelmingly tentative, reactive, and narrowly targeted, falling short of the scale and speed required for an economy facing a potential Hormuz disruption with only 50 to 60 days of buffer stock.
The Marcos administration’s approach is cautious to a fault, prioritizing fiscal prudence and avoiding “panic” over rapid, visible relief.
No across-the-board fuel subsidy, no VAT suspension on petroleum, no direct cash transfers for the poorest, and no price cap on LPG which is critical for households are forthcoming.
Inflation risks and peso depreciation are acknowledged but not countered with decisive intervention.
In a scenario where, global think tanks warn of $100 per barrel sustained prices and Asian economies face gross domestic product drags, the steps taken thus far are meant at damage limitation rather than crisis leadership.
They may prevent outright collapse in the next two to four weeks, but they do little to shield the most vulnerable or build resilience against a prolonged Hormuz closure.
A more robust response is needed instead of betting on quick deescalation abroad and hoping legislation passes before domestic turmoil erupts.
An expert said that after March, the oil reserves, or whatever other countries decide to do in response, will no longer help. Oil traders cannot recover their losses once the market slips past the brink of a full crash.
The consequences of such a collapse will be incalculable.